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Annual Wage Review 2017–18

Annual Wage Review 2017–18

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[2018] FWCFB 3500

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009

s.285—Annual wage review

Annual Wage Review 2017–18

(C2018/1)

JUSTICE ROSS, PRESIDENT
VICE PRESIDENT HATCHER
DEPUTY PRESIDENT ASBURY
COMMISSIONER HAMPTON
MR COLE
PROFESSOR RICHARDSON
MR GIBBS

SYDNEY, 1 JUNE 2018

Contents

Paragraph
1.	Overview and the Decision	[1]
2.	Economic and Labour Market Considerations	[109]
3.	Relative Living Standards and the Needs of the Low Paid	[263]
4.	Other Relevant Considerations	[372]
5.	Transitional Instruments and Other Matters	[437]
6.	Conclusion	[488]
Appendix 1—Research for Annual Wage Reviews
Appendix 2—Proposed Minimum Wages Adjustments
Appendix 3—Index of Material
Appendix 4—List of Appearances

Abbreviations

2009–10 Review decision	Annual Wage Review 2009–10 decision
2010–11 Review decision	Annual Wage Review 2010–11 decision
2011–12 Review decision	Annual Wage Review 2011–12 decision
2012–13 Review decision	Annual Wage Review 2012–13 decision
2013–14 Review decision	Annual Wage Review 2013–14 decision
2014–15 Review decision	Annual Wage Review 2014–15 decision
2015–16 Review decision	Annual Wage Review 2015–16 decision
2016–17 Review decision	Annual Wage Review 2016–17 decision
2017–18 Review decision	Annual Wage Review 2017–18 decision
2018–19 Review	Annual Wage Review 2018–19
AAWI	average annualised wage increase
ABI and NSWBC	Australian Business Industrial and the NSW Business Chamber Ltd
ABS	Australian Bureau of Statistics
ACCI	Australian Chamber of Commerce and Industry
ACCER	Australian Catholic Council for Employment Relations
ACOSS	Australian Council of Social Service
Act	Fair Work Act 2009 (Cth)
ACTU	Australian Council of Trade Unions
AFEI	Australian Federation of Employers and Industries
AHA	Australian Hotels Association
Ai Group	Australian Industry Group
All Trades matter	All Trades Queensland Pty Limited v CFMEU and Ors
ANZSIC	Australian and New Zealand Standard Industrial Classification
APCSs	Australian Pay and Classification Scales
Apprentices decision	Modern Awards Review 2012—Apprentices, Trainees and Juniors, [2013] FWCFB 5411
ARA	Australian Retailers Association
AWE	average weekly earnings
AWOTE	average weekly ordinary time earnings
AWRS	Australian Workplace Relations Study
C4	Engineering Associate/Laboratory Technical Officer Level 1
C10	Engineering/Manufacturing Tradesperson Level 1
C14	Engineering/Manufacturing Employee Level 1
CCIQ	Chamber of Commerce and Industry Queensland
CCIWA	Chamber of Commerce and Industry Western Australia
CCS	Child Care Subsidy
Commission	Fair Work Commission
CPI	Consumer Price Index
CURF	confidentialised unit record file
DSP	Disability Support Pension
ERO	Equal Remuneration Order
EEH	Survey of Employee Earnings and Hours
EHDI	equivalised household disposable income
FMW	Federal Minimum Wage
FTB	Family Tax Benefit
GDP	gross domestic product
GFC	global financial crisis
GVA	gross value added
HES	Household Expenditure Survey
HIA	Housing Industry Association
HILDA	Household, Income and Labour Dynamics in Australia
IMF	International Monetary Fund
LCI	Living Cost Index
Manufacturing Award	Manufacturing and Associated Industries and Occupations Award 2010
MGA	Master Grocers Australia
MIHL	Minimum Income for Healthy Living
Miscellaneous Award	Miscellaneous Award 2010
NAB	National Australia Bank
NAPSA	Notional Agreement Preserving State Awards
NBER	National Bureau of Economic Research
NCVER	National Centre for Vocational Education Research
NLW	National Living Wage
NMW	national minimum wage
NRA	National Retail Association
NSA	Newstart Allowance
NTWS	National Training Wage Schedule
OECD	Organisation for Economic Co-operation and Development
Panel	Expert…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2018] FWCFB 3500
Decision Date: 1 JUNE 2018

CaseChat Overview and Summary

This case involves the Annual Wage Review 2017-18, where the Fair Work Commission conducted a review of the national minimum wage (NMW) and modern award minimum wages under the Fair Work Act 2009. The panel was required to make a NMW order and consider variations to modern award minimum wages. The review affects a significant proportion of employees, including those paid at or near the NMW and modern award minimum wages, and those whose pay is set by a collective agreement linked to the Review. The primary legal issue before the court was whether the Panel appropriately considered the economic and labour market conditions, including macroeconomic data, when determining the minimum wage rates. The Panel was required to balance the considerations under the minimum wages objective and the modern awards objective, as outlined in the Fair Work Act.

The court found that the Panel had appropriately considered the economic and labour market conditions, including macroeconomic data, in making its determinations. The court rejected the argument that macroeconomic data were not useful for a Review, as the Panel needed to consider developments in all industries and the performance and competitiveness of the national economy. The court noted that while the degree of award reliance varied between industries, all industries contained a proportion of award-reliant employees, and thus developments in all industries were relevant. The court also highlighted that the minimum wages objective required the Panel to consider the performance and competitiveness of the national economy, which necessitated attention to macroeconomic data.

The court further determined that the Panel had appropriately considered developments in the most award-reliant industries and other relevant indicators in making its decisions. The court found that the Panel's approach to considering economic and labour market conditions was consistent with the statutory requirements and objectives outlined in the Fair Work Act. The court concluded that the Panel had adequately addressed the economic and labour market considerations when setting the NMW and varying modern award minimum wages.

The final orders of the court were that the Panel's decisions on the NMW and modern award minimum wages were upheld, as the Panel had appropriately considered the economic and labour market conditions and other relevant indicators in line with the statutory requirements and objectives. The court's decision affirmed the Panel's approach to the Annual Wage Review 2017-18 and the considerations it took into account when setting the minimum wage rates.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The Decision This Chapter summarises the matters we have considered, our reasoning and the increases we have decided upon. Chapters 2–4 of this decision deal with the statutory considerations we are required to take into account. We do not repeat that material here but the views expressed in this Chapter should be seen in the context of our decision as a whole. The Fair Work Act 2009 (Cth) (Act) requires the Expert Panel for annual wage reviews (Panel) to conduct and complete a review of the national minimum wage (NMW) and modern award minimum wages, in each financial year (the Review). The Panel must make a NMW order and may set, vary or revoke modern award minimum wages. The NMW order applies to award/agreement free employees[1] and modern award minimum wages are the minimum wages contained in modern awards.[2] The number of employees who have their pay set by an award is estimated to be 2.3 million or 22.7 per cent of all employees.[3] The proportion of employees that are paid at the adult NMW rate is estimated to be 1.9 per cent. Further, a significant number of employees are paid at junior or apprentice/trainee rates based on the NMW rate and modern award minimum wages. The Panel’s decision will also affect employees paid close to the NMW and modern award minimum wages and those whose pay is set by a collective agreement which is linked to the outcomes of the Review. The Panel is required to conduct each Review within the legislative framework of the Act, particularly the object of the Act in s.3, the modern awards objective and the minimum wages objective. As part of the Review, the Panel considers both the setting of the NMW rate and whether to make any variation determinations in respect of modern award minimum wages. Each of these tasks is undertaken by reference to the particular statutory criteria applicable to each function. The minimum wages objective applies to the exercise of functions and powers under Part 2-6 of the Act (which includes the Review),[4] and is set out in s.284(1) of the Act: The modern awards objective applies to the performance or exercise of ‘modern award powers’[5] (which are defined to include the variation of modern award minimum wages),[6] and is set out in s.134(1) of the Act: Further, s.578(a) provides that the Panel must take into account the objects of the Act in performing its functions or exercising its powers in a Review. Sections 134, 284 and 578 of the Act each direct the Panel to take into account certain specified considerations in conducting and completing a Review. As noted in Peko-Wallsend,[7] matters which a decision maker must ‘take into account’ are matters the decision maker is bound to consider and treat as matters of significance in the decision-making process.[8] There is a substantial degree of overlap in the considerations the Panel is required to take into account under the minimum wages objective and the modern awards objective, though some of these considerations are not expressed in the same terms.[9] Both the minimum wages objective and the modern awards objective require the Panel to take into account:

Ratio Decidendi

Legal Principle Established

Economic and Labour Market Considerations The economic and labour market considerations required to be taken into account in relation to the minimum wages objective in s.284(1)(a) and (b) and in relation to the modern awards objective in s.134(1)(c), (d), (f) and (h) are dealt with in this chapter. In addition, the Panel also considers a range of other relevant indicators. In doing so we examine information presented in the Statistical report, in submissions from parties, and in research published or referenced in the Research reference list by the Commission. We note at the outset the submission advanced by ABI and NSWBC that macroeconomic data are unlikely to be useful in a Review as they take a high-level view of the economy and that the Panel’s ‘primary consideration’ should be on parts of the economy most affected by Review decisions.[84] ACCI advances a submission in similar terms.[85] We do not accept this view for a number of reasons. Firstly, although the degree of award reliance varies between industries, all industries contain a proportion of award-reliant employees, and in none are the majority of employees award reliant.[86] That requires us to have regard to developments in all industries and, in that context, macroeconomic data affecting all sectors is relevant and useful. Secondly, the Act requires that we make a national decision concerning the NMW and to consider variations to the minimum wages prescribed in all modern awards. Noting that no party (with one possible exception[87]) has submitted that we should differentiate between modern awards in respect of minimum wage increases to arise from this Review, that necessarily requires us to pay regard to developments in the national economy as a whole. Thirdly, the minimum wages objective in s.284(a) requires us to take into account ‘the performance and competitiveness of the national economy,’ and this must accordingly be treated as a matter of significance in the decision-making process.[88] Fourthly, the ABI and NSWBC submission implicitly assumes that employees in a particular industry are not, in respect of minimum wage adjustments, entitled to some share in the prosperity of the national economy if that sector is not doing as well as the economy as a whole. That is an assumption which we do not accept (nor its corollary that employees in a better-performing sector should, in respect of minimum wage adjustments, not share in any mitigation that might be required if the national economy is performing poorly). In a dynamic economy, there will always be firms and industries that are doing better or worse than the economy-wide average, and there will always be firms that are failing, together with new firms that are being created. We do, however, pay close attention to developments in the most award-reliant industries as we discuss later in this chapter. Annual growth in GDP over the year to the December quarter 2017 was the same as its five-year average of 2.4 per cent[89] after falling below 2 per cent early in 2017 (Chart 2.1).